FUND VIEW-O'Shaughnessy puts own cash into equities

By Jeffrey Hodgson

TORONTO (Reuters) - With the global financial system mired in crisis and Western economies deep in recession, fund manager James O'Shaughnessy is so bullish on stocks he is pouring his own cash into the market.

The influential investor and author of "What Works on Wall Street" says that while stocks could revisit recent lows, the battering they took in 2008 has left them priced for a multiyear bull market.

To back that view up, the chairman of O'Shaughnessy Asset Management said he has taken proceeds from last year's sale of part of the firm to Royal Bank of Canada (RY.TO), and used that to buy stocks.

"We started to put money into the market in September and have continued to do so this month, and will do so until we're all in. And that should probably be February or March. All equities. This is me personally," he told Reuters.

"I would be nervous if I was doing this and was worried about where it might be in six months or a year. I'm not. I'm a long term investor."

The Stamford, Connecticut-based executive, whose firm managed more than $4.8 billion (3.3 billion pounds) at the end of last year, said there was no assurance that indexes such as the Dow Jones industrial average .DJI, Standard & Poor's 500 .SPX and Toronto's S&P/TSX composite .GSPTSE won't revisit lows see in November.

But he said his firm's quantitative investment approach, which uses computer models to study fundamentals and compare them against the price histories of thousands of stocks, points to better times.

With stock markets fresh off their worst yearly performance since the 1930s, valuations have slumped and the market now offers its best buying opportunity since 1982, O'Shaughnessy said.

"Right now, the numbers to us are saying that we have an extremely bullish outlook for the market for the next five to 10 years," he said.

"We now, for the first time since the 1950s, have a dividend yield on the S&P500 that exceeds the 10-year Treasury yield ... there is more money on the sidelines in the United States than at any other time since the late 1970s."

WARY OF TECH STOCKS

O'Shaughnessy, whose interests include financial market history and art, said the outlook is similar in Canada, where the firm sub-advises a family of mutual funds for RBC, the country's largest bank.

A fund fact sheet showed the C$1 billion (560 million pounds) RBC O'Shaughnessy Canadian Equity Fund, now closed to investors, has been a top quartile performer over the past 10 years.

But the fund had a tough 2008, falling more than 37 percent, compared with a 33 percent decline in its benchmark, a total return version of the S&P/TSX composite capped index .SPTSECP3, according to date from fund tracker Lipper, a unit of Thomson Reuters.

It also lagged the benchmark in the previous three calendar years.